Nairobi Securities Exchange’s (NSE) real estate investment trust, ILAM Fahari Real Estate Investment Trust, has secured regulatory approval from the Capital Markets Authority (CMA) to convert its unrestricted ILAM Fahari Income Real Estate Investment Trust (IFIR) into a restricted I-REIT.
The approval by CMA follows a prior cautionary statement issued in March 2022, revealing that the REIT was undergoing a strategic review involving the operational restructuring of IFIR.
The proposed Kshs 402 million transaction permits IFIR’s Non-Professional Investors to redeem up to 36,585,134 Units at a Redemption Offer Price of KSH 11 per unit.
Presently, ILAM Fahari I-REIT owns four real estate properties, including a shopping center, an office building, and two semi-office/light industrial buildings, all held through special purpose vehicles.
Einstein Kihanda, CEO of ICEA LION Asset Management (ILAM), said that the conversion to a Restricted I-REIT is the initial phase of transitioning the I-REIT’s listing from NSE’s Unrestricted Main Investment Segment to the Unquoted Securities Platform (USP), where it will continue to trade. Mr Kihanda noted that the redemption offer targets Non-Professional Investors, as a restricted REIT is exclusively for professional investors. The Redemption Offer Price of KSH 11 per unit represents an 82.72% premium over the current market price of KSH 6.02 per unit.
The decision to convert and restructure is the result of a comprehensive strategic review conducted in 2021, aiming to address challenges, improve returns, and enhance market performance.
The move away from UMIMS will facilitate restructuring, cost reduction, attraction of new investments, and property acquisitions. The possibility of returning IFIR to the main board of NSE will be assessed three years after a successful execution of the growth strategy.
IFIR will continue to be regulated by CMA and registered with the Kenya Revenue Authority (KRA).
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